China's Economy Expands 9.7%, March Inflation Accelerates to 5.4%

Devan Biswas
15 Apr, 2011
New York City

China reported faster than expected economic expansion in the first quarter and inflation gained in March to 5.4%, a month after Lunar Year holiday. Steelmakers and banks closed higher but Angang Steel plunged 5% after it estimated earnings fall of 95% in the first quarter.

[R]4:30 PM Hong Kong – China reported faster than expected economic expansion in the first quarter and inflation gained in March to 5.4%, a month after Lunar Year holiday. Steelmakers and banks closed higher but Angang Steel plunged 5% after it estimated earnings fall of 95% in the first quarter. Real estate stocks in Hong Kong fell for the second day.[/R]

Stocks in Shanghai and Hong Kong closed lower after economy expanded at 9.7% in the first quarter, consumer price inflation increased 5.4% in March and wholesale inflation rose 7.3% in the quarter. Industrial output increased 14.4% in the quarter.

Inflation always accelerates a month after the Lunar Year holiday and this year it fell in February.

The latest economic data from the statistics agency comes a day after China reported its foreign exchange reserve of more than $3.0447 trillion and bank credit expanded in March to 679.4 billion yuan or $104 billion.

China also reported first time its quarterly economic growth of 2.1% compared to previous quarter and consumer price inflation declined 0.2% from February in March.

The Shanghai Composite Index increased 0.3% to 3,050.53 and the CSI 300 Index added 0.2% to 3,358.94.

Hang Seng index ended down 5.93 to 24,008.07 on Friday but closed down 1.6% in the week on the sharp decline in property stocks.

March inflation in China rose to 5.4% after increasing at 4.9% in February and the highest pace since July 2008. The economic expansion in the first quarter was 9.7% compared to 9.8% in the last quarter of 2010.

Wholesale inflation increased at 7.3% in March, up 0.6% from February and industrial production increase 14.4% in the first quarter.

The National Bureau of Statistics also said that home sales increased 26% in the first quarter to 860.7 billion yuan and property values rose 27% to 1.02 trillion yuan.

Stock Movers

In Shanghai trading banks, steelmakers and developers closed higher.

China Baoan Group Co. increased 5.5% to 20.91 yuan after the company said in a regulatory filing with the Shenzhen Exchange its plan to develop two graphite mines in Heilongjiang Province. The reserves at the mine are estimated at more than 50 million tons.

Angang Steel Co declined 5.3% in Hong Kong trading and 2.6% in Shenzhen after the steelmaker estimated first quarter net decline of 94% on higher raw materials and fuel prices.

Baoshan Iron & Steek Co. Ltd declined 1.4% and Guangzhou Iron and Steel dropped 2.4%.

Industrial And Commercial Bank of China Ltd increased 1.5% to 4.70 yuan and China Construction Bank Co. added 1.2% to 5.28 yuan.

China Enterprise Co. soared 8.6% to 8.80 yuan and China Vanke increased 1.1% to 8.90 yuan.

Wuhu Conch Profiles and Science declined 5.5% to 10.30 yuan after the company said its first quarter net income plunged 81% from a year ago quarter to 5.67 million yuan.